IBM wants to move blockchain tech beyond Bitcoin and money transfer

Company says a distributed ledger will help businesses operate more efficiently.

On Tuesday, IBM announced that it’s been working to make blockchain technology—which was refined and popularized by Bitcoin—easier for businesses to use for financial and non-financial purposes. Specifically, the company is launching what it’s calling “blockchain-as-a-service,” or a set of tools for "creating, deploying, running, and monitoring blockchain applications on the IBM Cloud.”

Further Reading

The idea of applying blockchain technology outside of the realm of Bitcoin has gained a lot of interest from forward-thinking companies in the past year or so. Blockchain applications are also called “distributed ledger technology” because they remove the need for a centralized database and, like Bitcoin, give every transaction in a particular system a cryptographic hash that can be checked by any member of the group.

Traditional financial institutions as well as startups hoping to serve those banks and stock exchanges have been among the first to glom onto the idea that a decentralized ledger could be used to make money transfer more reliable and more secure. If all parties can double check money transfers (even if they don’t know what was exchanged in the transfer), then theoretically, errors caused by mistake or malice could be reduced. Recently nine banking institutions including JP Morgan, BBVA, and Credit Suisse partnered with a company called R3 to work on decentralizing some databases. At the World Economic Forum in Davos this January, MasterCard officials said that the credit card network was carefully studying how to best apply blockchain concepts.

But IBM is targeting its new blockchain efforts not only at potential financial-industry customers, but at a variety of logistics customers as well. IBM spokesperson Holli Haswell told Ars that a good example for a non-monetary use of a distributed ledger could be shipping. If a business is trying to ship food across the county, the companies in contract with one another could “apply contract resolution and auditing to the blockchain if for instance a shipment of food is spoiled, allowing you to see the temperature of the cargo container throughout the shipping process.” In such a scenario, shipments would be outfitted with RFID tags and sensors that could record temperature, location, and any number of other statistics that could be reported back to the distributed ledger.

"It is a single source of truth that can be shared among all parties that could be applied to a lot of different industries,” Haswell said of blockchain technology.

"When all participants in an interaction have an up-to-date ledger that reflects the most recent transactions or changes, this allows organizations to cut out intermediaries and settle contracts or transactions much faster," Haswell added. "Speed, visibility, and having an immutable record are the primary business reasons blockchain could make sense in some industry applications."

IBM also reported that it has contributed significant resources to developing standards for blockchain use with Hyper Ledger, an open-source Linux Foundation Collaborative Project. Although the IBM spokesperson declined to comment on how much money IBM has put toward the effort, the company did note that it devoted 35 researchers and software engineers to writing 44,000 lines of code for the Hyper Ledger project.